By Robert Willmann
Since written governmental law deals only with words, anything is possible. This nifty state of affairs is great for some people until it runs into human nature, mathematics, production, and Mother Nature. Not being made up of volunteers working for no pay, the federal government as an organization needs money. The Congress is to arrange for the money, and the magic word is “appropriate”. After saying that a certain amount of money is needed, the federal government tells the public to pay up in the form of taxes, fees, and tariffs, whether the public likes it or not. If not enough money comes in, the government borrows money and tells the public to pay that, too.
The payments made to the federal treasury are not voluntary, and the latest order to pay starts with the proposed House Resolution 1968, which is 99 pages long and begins with the usual wording [1]—
“The following sums are hereby appropriated, out of any money in the Treasury not otherwise appropriated, and out of applicable corporate or other revenues, receipts, and funds, for the several departments, agencies, corporations, and other organizational units of Government for fiscal year 2025, and for other purposes….”
This bill is set to be voted on later today, 11 March 2025. The House Committee on Rules after a vote of 9 to 3, sent at 9:26 p.m. last night what became House Resolution 211. It provides a fast track to vote on the “continuing resolution” to order funding for the government to avoid the shutdown process that would begin after 14 March, this Friday.
At 12:35 p.m. central time, the House considered H. Res. 211 to pave the way for the the money bill, H.R. 1968. By a vote of 216 to 214, with two members not voting, the resolution was approved.
But where is that voracious, prowling tiger — the federal debt? It is nowhere to be seen in H.R. 1968. Not a word about the “debt limit”. The Treasury Department is maneuvering by using “extraordinary measures” to stay below the latest limit which appeared on 2 January 2025 as $36,103,996,000,000. As of last Friday, 7 March 2025, the debt subject to the limit was $36,103,971,000,000, a scant $25 million below the limit, according to the Daily Treasury Statement. The total debt was $36,217,824,000,000 [2].
The Trump administration from day one announced that it was stopping a lot of foreign aid money, although still providing some to Ukraine, Israel, and probably others. This action had a second effect: it reduced federal expenditures. The cuts in federal employment and contracts do also. Income taxes paid into the the government increase this time of year before the first tax day in April. The extraordinary measures by the Treasury Department further assist the effort to keep the total debt that is issued below the ceiling.
We discussed here previously the two letters sent by former Treasury Secretary Janet Yellen to Congress about the debt limit problem. Before the current Secretary Scott Bessent was sworn in on 28 January 2025, the Acting Secretary, David Lebryk, sent on 23 January a similar letter to Congress advising it of the ongoing extraordinary measures.
The Treasury Department now gives us the following list of the extraordinary measures regarding the debt subject to the limit — from 21 January to 5 March 2025. The word “measures” seems to refer to the amounts of money, stated in billions of dollars.
What is happening today is the House of Representatives wants to order by legislation that money be provided to keep the federal government operating from 15 March until the end of September 2025. If the bill passes, then the Senate will have to consider it as is or with modifications. Congress previously passed a law on 20-21 December 2024 to fund the government through 14 March 2025.
However, a so-called federal budget was separately produced and passed with new and unusual language in February 2025 by the House in House Concurrent Resolution 14 and by the Senate in Senate Concurrent Resolution 7. These proposals are disturbing and describe the rest of fiscal year 2025 and forward for fiscal years 2026 through 2034. They are another subject for discussion.
Starting around 2:40 p.m. central time, the House began discussion of H.R. 1968, to be one hour. Previously this afternoon, they considered a bill to extend the statute of limitations for fraud in the Covid-19 payments, and a bill stating disapproval of an IRS rule about the sale of cryptocurrency. A recorded vote on those two bills is postponed.
Recorded votes on all three bills could take place later today.
[1] House Resolution 1968, filed on 10 March 2025.
http://www.congress.gov/119/bills/hr1968/BILLS-119hr1968ih.pdf
http://www.congress.gov/bill/119th-congress/house-bill/1968/text
[2] Daily Treasury Statement. Friday, March 7, 2025.
Gave a quick read through of the DoD title. For the most part it provides new top-line numbers for each “color of money”, and in Sec 1409 uses the FY25 defense appropriation bills from the House and Senate to fund specific programs / specify procurement levels. Didn’t look at the MilCon segment.
It may not make a difference if Congress extends or expands TCJA. DOGE made noise about giving the W/F/A savings they found to taxpayers a few weeks ago. I hope they don’t. Although I’m one of the “net-income taxpayers” they shouldn’t risk prolonging inflation by restarting the money printer. More importantly the feds have been running a deficit for decades and the 2025 interest amount will be crushing. There is NO money.
After WWII, Congress knew how to reduce the national debt and they did so for decades until 1981. After that, starting with Regan, it has risen substantially. You can bring back the 90% marginal rates and do it again, but that is unlikely since the oligarchs now own the Congress. What may happen is that the US$ devalues enough to get it done, but the general cost will be spectacular and if you think we have political unrest now, it would grow exponentially. It will essentially come down to whether to manage it, or have it done haphazardly and uncontrolled. Right now it looks like the latter will prevail.
Reposting this at a more appropriate place.
The original posting, with comments from leith and Fred, is here:
https://turcopolier.com/open-thread-5-march-2025/#comment-248984
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I think it is worthwhile to pay attention to a hugely significant issue:
“If you think the current outlook is bad,
just wait until [Washington] can’t find anyone to buy its debt,
warns Ray Dalio”
https://fortune.com/2025/03/12/national-debt-burden-ray-dalio-foreign-government-pressure/
Without a paywall:
https://finance.yahoo.com/news/gold-reaches-3000-as-trade-war-escalates-economic-uncertainty-rises-140658775.html
This is clearly unsustainable.
There will be buyers of US debt, but they will ask for a lot higher interest and that will exponentially increase the problem. I agree that it is unsustainable. The question remains how it will be resolved and that is a political problem that our current situation is unable to deal with. So others will do it for us and I can assure you it will be painful. While the geopolitical situation has deteriorated, this is still the biggest problem we face. A repeat of October 24, 1924 would just be one of many.